September 16, 2008

California headed over a cliff

People used to joke about California falling into the ocean after the "big" earthquake. Well given what has happened on Wall St. this last week and given our unprecedented late budget, California may fall into the ocean all right. An ocean of debt. Tom McClintock, who is termed out this year and is running for congress sadly summed up California's predicament at the conclusion of the budget process on September 15-16 (11 weeks beyond the Constitutional deadline of July 1...but hey that's just the state constitution...its meaningless). We felt this needed to be aired as surely the mainstream press will not cover this as it needs to be covered:

Sen. McClintock: "I believe we've now also passed the point where conventional budget reductions can restore our state's finances. I believe we've reached a terminal stage of a bureaucratic state where our bureaucracies have become so large and so tangled that they can no longer perform basic functions. This fiscal crisis will now only get worse until we are willing to tell the Prison Guards Union, sorry but we're putting our wardens back in charge of our prisons. It can only get worse until we're willing to tell the Teachers Union, sorry but we're putting our teachers back in charge of their classrooms and we're putting our principals back in charge of our teachers. The bureaucratization, and the centralization and the unionization of our service delivery systems have simply priced our government beyond our economy's ability to support...

...I close my 22 years in this legislature tonight with this final warning. California's budget crisis will only worsen until the public elects a legislature and a Governor willing to restore the governing principles and practices under which this state once flourished, or until the credit market finally stops lending the state money..."

When McClintock concluded his statement there was utter silence from the Legislature. Not one democrat or republican said anything in opposition.

So is California headed the way of Vallejo and Lehman Brothers? I guess we will know next time this year.

For the remainder of McClintock's budget statement read below:
Debate on the State Budget
Senator Tom McClintock
Date: August 29, 2008
Publication Type: Press Release

Mr. President:

Last year, when some in this chamber assured us that the budget was not only balanced, but included the biggest budget reserve in the state’s history, others of us issued an urgent warning that the budget was dangerously unbalanced and that we were fast running out of the time needed to implement reforms.

The State Controller reports that during last year we received $96 billion in revenues – a new record -- but spent $107 billion. And now we’re running out of money.

I am concerned that conventional budget reductions alone will no longer bridge the fiscal gap without severely impacting delivery of vital services.

We have centralized and unionized and bureaucratized our service delivery systems to the point they can no longer adequately perform the basic tasks for which they were designed.

Simply stated, we have created a bureaucracy we cannot afford.

We cannot afford spending 1/3 of a million dollars per classroom when only a fraction of that actually trickles into the classroom to educate our kids.

We cannot afford spending $42,000 to house a prisoner when Florida does it for $18,000 and the federal government for $26,000.

We are going to have to clear away the massive bureaucracy in our public schools that does nothing to educate our children and instead put teachers back in charge of their classrooms, put principals back in charge of their teachers – including the authority to hire and fire -- and put parents back in charge of their principals through their local school boards.

We are going to have to rescind the sweetheart labor contracts in our prisons, restoring management authority to the wardens and contracting out at least 50,000 prison beds.

We are going to have to replace the massive bureaucracy in our health system with a simple prepaid refundable tax credit to bring within the reach of every family a basic health plan of their selection.

This is the only way we are going to be able to maintain vital services without bankrupting the state. But if the consensus does not exist to enact conventional budget reductions, it certainly doesn’t exist to enact a fundamental restructuring.

During my 22 years in this legislature, I and others have laid out all these proposals, but they have fallen on deaf ears. There is some bitter irony in the fact that those who have voted against these proposals year after year accuse Republicans of not offering alternatives when that is all we have done year after year. But at some point very soon, these reforms, or others like them, will have to be enacted.

Senator Ducheny tells us that the budget before us is a baseline budget; that it merely continues business as usual. The problem is that business as usual produced $11 billion of red ink and we cannot afford to do so again.

Nor can I agree that the path to fiscal recovery is through taking the highest sales tax in the nation and raising it still higher with the second biggest tax increase in the state’s history. In that respect, I agree with Barak Obama who last night said: “In an economy like this, the last thing we should do is raise taxes on the middle-class.” And yet that’s the first thing this budget does.

I was here in 1991, and I warn you that raising the sales tax did not improve our finances – it made them worse.

The census bureau reports that in the last two years, a half million more people have moved out of California than have moved in. The historic migration FROM Oklahoma and Arkansas TO California in the 1930’s has now reversed itself in an historic outmigration of Californians TO those states with lower taxes and vastly less burdensome regulations (including Oklahoma and Arkansas). The difference is that the dust-bowl migration was caused by an act of God – the new migration is caused by acts of government – OUR government.

Those acts are fully within our power to reverse – but that will mean reversing the policies that have wrecked the once Golden State of California.

I would conclude with an observation on process. It is good that for the first time since the budget deadline we finally have a formal budget proposal on the Senate floor to begin deliberations. But it is unfortunate that this did not arrive on our floor in May. And it should have stayed on this floor day after day until it cleared the 27 votes needed to send it to a conference committee.

So I would ask those of you who voted to send an empty budget bill directly to the conference committee earlier this year to contemplate the damage that was done by bypassing the entire legislative process. And I would express the hope that the next session of the Senate finally return to the traditions and procedures that served this state so well for many, many decades and that produced relatively balanced and relatively punctual state budgets.

Lakewood Accountability Action Group™ LAAG | | Lakewood, CA
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